Indiana Bell Telephone Co. v. Smithville Telephone

• Decision Date: 29 December 1998
• Docket Number: No. IP 98-0593-C M/S.,IP 98-0593-C M/S.
• Parties: INDIANA BELL TELEPHONE COMPANY INCORPORATED, d/b/a Ameritech Indiana, Plaintiff, v. SMITHVILLE TELEPHONE COMPANY, INC., et al., Defendants.
• Court: U.S. District Court — Southern District of Indiana

31 F.Supp.2d 628

INDIANA BELL TELEPHONE COMPANY INCORPORATED, d/b/a Ameritech Indiana, Plaintiff, v. SMITHVILLE TELEPHONE COMPANY, INC., et al., Defendants.

No. IP 98-0593-C M/S.

United States District Court, S.D. Indiana, Indianapolis Division.

December 29, 1998.

COPYRIGHT MATERIAL OMITTED

A. David Stippler, Ameritech Indiana, Anne N. DePrez, Barnes & Thornburg, Indianapolis, IN, for Plaintiff.

Larry J. Wallace, Parr Richey Obremskey & Morton, William B. Powers, Boberschmidt & Powers, Indianapolis, IN, Stephen G. Kraskin, Kraskin Lesse & Cosson, Washington, DC, Beth H. Henkel, Deputy Attorney General, Office of the Attorney General, Indianapolis, IN, for Defendants.

ORDER

McKINNEY, District Judge.

This matter comes before the Court on motions filed by the defendants challenging the Court's subject matter jurisdiction over the claims raised in the plaintiff's case. On September 10, 1998, defendant Indiana Utility Regulatory Commission ("IURC" or "Commission"), and five commissioners of the IURC (collectively the "State Defendants"), filed their motion arguing alternatively that:

1. The IURC's decision regarding the plaintiff's arbitration petitions was an interim decision, and not a final one under 47 U.S.C. § 252(e)(6), which means the Court has no subject matter jurisdiction under that statute;

2. Only an Indiana appellate court could have jurisdiction over an interim decision of a state agency, and because such an appeal is pending this Court should abstain from the exercise of jurisdiction; and

3. Because the State of Indiana has not consented to suit in this action and Congress did not abrogate a state's immunity with respect to intrastate communications service and rates, the 11th Amendment of the Constitution bars this action.

A similar motion to dismiss was filed by twenty-six of the twenty-seven rural telephone companies (the "LECs" or "rural LECs") named in this action by plaintiff, Indiana Bell Telephone Company, Inc., d/b/a Ameritech Indiana ("Ameritech"). In addition to the statutory grounds argued by the State Defendants, the rural LECs argue that Ameritech has failed to exhaust its administrative remedies.

Having considered the arguments and evidence presented by the parties in their briefs, the Court finds that it does not have subject matter jurisdiction over the controversy between Ameritech and the IURC, or between Ameritech and the rural LECs. For the reasons further explained herein, the Court GRANTS both of the motions to dismiss.

I. BACKGROUND

On February 8, 1996, Congress passed the Telecommunications Act of 1996 (the "1996 Act" or the "Act") to effect comprehensive changes in the 1934 Telecommunications Act. Pub.L. 104-104, 110 Stat. 56 (codified as amended in scattered sections of Title 47, United States Code). The primary purpose of the 1996 Act "was to reduce regulation and encourage the rapid deployment of new telecommunications technology." Reno v. American Civil Liberties Union, 521 U.S. 844, 117 S.Ct. 2329, 2337, 138 L.Ed.2d 874 (1997). As the Supreme Court noted, the major components of the 1996 Act are designed to "promote competition in the local telephone service market, the multichannel video market, and the market for over-the-air broadcasting." Id. One aspect of achieving this pro-competition goal calls for telecommunications carriers to enter reciprocal compensation agreements for local calls that use each other's networks. 47 U.S.C. § 251(b)(5). Put simply,

If a subscriber of Company A calls a subscriber of Company B, then A must share with B some of the revenue A collects from its subscriber, to compensate B for the use of its facilities.

Illinois Bell Tel. Co. v. WorldCom Tech., 157 F.3d 500, 501 (7th Cir.1998).

This requirement is enforced by state agencies, such as the IURC in Indiana. See Id.; see also Iowa Util. Bd. v. Federal Communications Commission, 120 F.3d 753, 804 (8th Cir.1997), cert. granted, ___ U.S. ___, 118 S.Ct. 879, 139 L.Ed.2d 867 (1998) (power to approve or reject agreements implies power to enforce them). The way this happens is that the two local telecommunications carriers are required to reach an agreement covering the interconnection charges used to provide "reciprocal compensation" for use of each other's facilities. That agreement is then approved by the State commission after it has been reviewed to determine its compliance with the relevant statutory and regulatory standards. A decision by the State agency approving or rejecting an agreement and implementing the 1996 Act, may be reviewed only by a federal district court. Id., 47 U.S.C. § 252(e)(6).

The provisions of the 1996 Act at issue in this litigation are found in Part II — Development of Competitive Markets, in the Subchapter titled "Common Carriers." 47 U.S.C. §§ 251 and 252. Therein, Congress established certain duties and obligations for telecommunications carriers generally, 47 U.S.C. § 251(a), for local exchange carriers ("LECs"), 47 U.S.C. § 251(b), and specific additional obligations for incumbent local exchange carriers ("ILECs"), 47 U.S.C. § 251(c). An ILEC is the local exchange carrier that, with respect to a given area, provided the area's telephone exchange services as of February 8, 1996. 47 U.S.C. § 251(h)(1). The general duty of all carriers is to "interconnect directly or indirectly with facilities and equipment of other telecommunications carriers" and to install network features, functions or capabilities that comply with the guidelines and standards set forth in other provisions of the Act. 47 U.S.C. § 251(a).

The duties for the LECs include, among other things, the duty to "establish reciprocal compensation arrangements for the transport and termination of telecommunications." 47 U.S.C. § 251(b)(5). This duty is at the core of the dispute between Ameritech and the rural LECs. Additional duties for ILECs include "the duty to negotiate in good faith ... the particular terms and conditions of agreements to fulfill the duties [in § 251(b) and (c)]." 47 U.S.C. § 251(c). Likewise, the ILEC must "provide ... interconnection ... at any technically feasible point" in its network, and "on rates, terms, and conditions that are just, reasonable, and nondiscriminatory. ..." Id. If the requesting telecommunications carrier asks for it, the ILEC must also provide the interconnection on an "unbundled basis." Id.; see also Iowa Util., 120 F.3d at 791 (describing three duties of ILECs: interconnection, unbundled access, and resale).

In addition to imposing these obligations on the carriers, the 1996 Act also provides for an exemption from the obligations of interconnection and reciprocal compensation agreements to rural telephone companies. 47 U.S.C. § 251(f). The exemption is automatic, and it applies until the State commission conducts an inquiry to determine whether the obligations of the Act will impose an undue economic burden on the carrier, considering the technical feasibility of interconnection and the issues surrounding the need to maintain universal service. Id. § 251(f)(a)(B). To facilitate that inquiry, a requesting telecommunications carrier is required to give the State commission notice of its request for interconnection services, following which the commission will have 120 days in which to make its determination. Id. The State commission may also suspend or modify application of the requirements for rural LECs and ILECs of a certain size, if it is necessary to "avoid a significant adverse economic impact on users of telecommunications services generally," to "avoid imposing a requirement that is unduly economically burdensome," or if it is "technically infeasible." 47 U.S.C. § 251(f)(2). The suspension or modification must be consistent with the "public interest, convenience, and necessity." Id. All of these determinations require an affirmative act and technical findings by the State commission before a decision may be reached.

Finally, § 252 of the Act sets forth procedures for negotiating, arbitrating and obtaining final approval of interconnection agreements. 47 U.S.C. § 252. The process begins with a bona fide request for negotiation of an interconnection agreement ("Request"). Id. § 252(a). If the Request is directed to a rural LEC, the State commission also should receive a notice of the Request. 47 U.S.C. § 251(f)(1)(B). If the State commission determines that the rural LEC is not exempt from § 251(c), it must then establish an implementation schedule for compliance with the request. Id. Only then may an agreement be reached by voluntary negotiations between the rural ILEC and any telecommunications carrier seeking interconnection or network services. Id. § 252(e). The State commission also may participate in the negotiations at any point, if the negotiating parties request it, and it may mediate any differences. Id. § 254(a).

However, if voluntary or mediated negotiations fail to produce a complete agreement within a specific period of time after the initial Request, any party may petition the State commission to "arbitrate any open issues."¹ 47 U.S.C. § 252(b). The arbitration clock starts ticking on the date of the Request for an interconnection services agreement, and arbitration may only be sought between the 135th and 160th days after that date.² Id. § 252(b). If arbitration is sought, the State commission must fully resolve each issue presented by either party for the arbitration within nine months of the date of the initial Request for an interconnection services agreement. 47 U.S.C. § 252(b)(4). During an arbitration, the State commission must limit its review to the issues set forth in the petition and any responses thereto, although it may require the parties to submit additional information necessary to the arbitration. Id. § 252(b)(4). If any party refuses to negotiate, participate, or cooperate with the State commission during an arbitration, it "shall be considered as a failure to negotiate in good faith." Id. §...